Can an Indemnified Party settle a claim at the Clean Your Dirty Face franchisee's expense?
Clean_Your_Dirty_Face Franchise · 2025 FDDAnswer from 2025 FDD Document
r willful misconduct in a final, unappealable ruling issued by a court or arbitrator with competent jurisdiction; and/or (iv) your employment practices, whether instituted by your employees or by others.
For purposes of this indemnification, "claims" include all obligations, damages (actual, or consequential), and costs that any Indemnified Party reasonably incurs in defending any claim against it, including reasonable accountants', arbitrators', attorneys', and expert witness fees, costs of investigation and proof of facts, court costs, travel and living expenses, and other expenses of litigation, arbitration, or alternative dispute resolution, regardless of whether litigation, arbitration, or alternative dispute resolution is commenced. Each Indemnified Party may at your expense, defend any claim against it (including choosing and retaining its own legal counsel), agree to settlements, or take any other remedial, corrective, or other actions.
This indemnity will continue in full force and effect subsequent to and notwithstanding this Agreement's expiration or termination. An Indemnified Party need not seek recovery from any insurer or other third party, or otherwise mitigate its losses and expenses, in order to maintain and recover fully a claim for indemnity under this Section.
Source: Item 22 — CONTRACTS (FDD page 54)
What This Means (2025 FDD)
According to Clean Your Dirty Face's 2025 Franchise Disclosure Document, an Indemnified Party can settle a claim at the franchisee's expense. The franchisee is responsible for covering all obligations, damages, and costs that the Indemnified Party reasonably incurs while defending a claim. These costs include accountant, arbitrator, attorney, and expert witness fees, as well as investigation costs, court costs, travel, living expenses, and other litigation-related expenses.
Clean Your Dirty Face's FDD specifies that each Indemnified Party has the right to defend any claim, choose and retain their own legal counsel, agree to settlements, or take any other remedial actions at the franchisee's expense. This means that Clean Your Dirty Face or any of its affiliates do not need the franchisee's consent to settle a claim, and the franchisee will be responsible for the settlement costs.
Furthermore, the indemnity remains in effect even after the Franchise Agreement expires or terminates. The Indemnified Party is not required to seek recovery from any insurer or third party, or mitigate losses, before claiming indemnity from the franchisee. The franchisee's obligation to cover these costs will not be reduced even if the Indemnified Party does not attempt to mitigate their losses. This could create a significant financial burden for the franchisee, as they may be responsible for substantial costs even if they believe the settlement was not the most favorable outcome.